Clearmind Medicine Inc 20-F/A for FY2023
Clearmind Medicine Inc. (CMND)
About this 20-F/A
Clearmind Medicine Inc filed this 20-F/A on March 18, 2024, covering the fiscal year ended October 31, 2023 (FY2023).
Headline figures
Fiscal year ended October 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $8.62M
- compared with a net loss of $6.89M a year earlier
- Diluted EPS
- -$42.58
- compared with -$159.11 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Amendment No. 1)
OR
For the fiscal year ended
OR
OR
Date of event requiring this shell company report ____________
For the transition period from ____________ to ____________
Commission File No.:
(Exact name of registrant as specified in its charter)
Translation of registrant’s name into English: Not applicable
| (Jurisdiction of incorporation or organization) | (Address of principal executive offices) |
Chief Executive Officer
Tel:
Email:
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class to be registered | Trading Symbol(s) | Name of each exchange on which each class is to be registered | ||
| The |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Number of outstanding shares of each of the issuer’s classes
of capital or common stock as of October 31, 2023:
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes ☐
If this report is an annual or transition report, indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act of 1934. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Emerging Growth Company |
If an emerging growth company that prepares its financial statements
in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
| U.S. GAAP ☐ | Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant
is a shell company. Yes ☐ No
EXPLANATORY NOTE
This Amendment No. 1 to the Annual Report on Form 20-F (“Amendment No. 1”) is being filed by Clearmind Medicine Inc. (the “Registrant”) for the sole purpose of addressing the following items in the Registrant’s Annual Report on Form 20-F for the year ended October 31, 2023, filed with the Securities and Exchange Commission on January 29, 2024 (the “Annual Report”) and to file the exhibits relating thereto:
| ● | To revise the report of the predecessor Independent Public Accounting Firm to exclude reference to the audit of retrospective adjustments to comparison financial information for the year ended October 31, 2021 related to the November 28, 2023 reverse share split and change in presentation currency, which reference was dual-dated after the predecessor auditor’s registration with the PCAOB was withdrawn, and to re-issue the report of the Independent Registered Public Accounting Firm of the Company’s auditors pursuant to the engagement of the Company’s auditors in March 2024 to audit such retrospective adjustments to the consolidated financial statements for the year ended October 31, 2021. |
This Amendment No. 1 consists of: a cover page; this explanatory note; Item 19 (as amended); the signature page; the Registrant’s consolidated financial statements, which includes amended Reports of two Independent Registered Public Accounting Firms; and the amended exhibits referenced in Item 19.
Other than as expressly set forth herein, this Amendment No. 1 does not, and does not purport to, amend or restate any other information contained in the Annual Report nor does this Amendment No. 1 reflect any events that have occurred after the Annual Report was filed.
1
ITEM 19. EXHIBITS.
2
| * | Previously filed on January 29, 2024. |
| ** | Filed herewith. |
| # | Management contract or compensatory plan. |
3
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to the Annual Report filed on its behalf.
| CLEARMIND MEDICINE INC. | ||
| Date: March 18, 2024 | By: | /s/ Dr. Adi Zuloff-Shani |
| Dr. Adi Zuloff-Shani | ||
| Chief Executive Officer | ||
4
CLEARMIND MEDICINE INC.
Consolidated Financial Statements
(Expressed in United States Dollars)
F-1
CLEARMIND MEDICINE INC.
Index of Financial Statements
As of October 31, 2023
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Clearmind Medicine Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Clearmind Medicine Inc. and its subsidiaries (the “Company”) as of October 31, 2023, and 2022, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity (deficit) and cash flows for each of the two years in the period ended October 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended October 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
The consolidated financial statements of the Company for the year ended October 31, 2021, before the effects of the adjustments to retrospectively apply the effects of the November 28, 2023 reverse share split and change in presentation currency from the Canadian dollar to the U.S. dollar discussed in Note 1c and 1d to the financial statements, were audited by other auditors whose report, dated March 8, 2022, (except as to Note 1c which is as of October 19, 2022) expressed an unqualified opinion on those statements. We have also audited the adjustments to the consolidated financial statements for the year ended October 31, 2021 to retrospectively apply the effects of the November 28, 2023 reverse share split, as discussed in Note 1c, and the change in presentation currency from the Canadian dollar to the U.S. dollar, as discussed in Note 1d to the financial statements. Our procedures related to the retrospective adjustments for the reverse share split included (1) comparing the amounts shown in the earnings per share disclosures for 2021 to the Company’s underlying accounting analysis, (2) comparing the previously reported shares outstanding and income statement amounts per the Company’s accounting analysis to the previously issued consolidated financial statements, and (3) recalculating the adjusted shares to give effect to the reverse share split and testing the mathematical accuracy of the underlying analysis. Our procedures related to the retrospective adjustments for the change in presentation currency from the Canadian dollar to the U.S. dollar included (1) obtaining the Company’s underlying accounting analysis prepared by management of the retrospective adjustments for the change in presentation currency and comparing the retrospectively adjusted amounts per the 2021 consolidated financial statements to such analysis, (2) comparing previously reported amounts to the previously issued consolidated financial statements for such year, (3) testing the mathematical accuracy of the accounting analysis. In our opinion, such retrospective adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2021 consolidated financial statements of the Company other than with respect to the retrospective adjustments, and accordingly, we do not express an opinion or any other form of assurance on the 2021 consolidated financial statements taken as a whole.
Change in Presentation Currency
As discussed in Note 1d to the financial statements, the Company changed the presentation currency from Canadian dollar to United States dollar and has applied this change retrospectively for all periods presented.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1b to the financial statements, the Company’s accumulated losses and the additional funds needed to maintain its operations raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1b. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
F-3
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
Certified Public Accountants
A Firm in the Deloitte Global Network
January 29, 2024 (March 18, 2024, as to the November 28, 2023 reverse share split described in Note 1c and the change in presentation currency discussed in Note 1d)
We have served as the Company’s auditor since 2023.
F-4
INDEPENDENT AUDITOR’S REPORT
To the Shareholders and Board of Directors of Clearmind Medicine Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for the year ended October 31, 2021 of Clearmind Medicine Inc. (the “Company”) and related notes (collectively, the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of their operations and cash flows for the year ended October 31, 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Explanatory Paragraph Regarding Going Concern
Without modifying our opinion, we draw attention to Note 1 in the consolidated financial statements which indicates that there are material uncertainties that cast significant doubt about the going concern assumption. The Company has not generated any revenues, has negative cash flow from operations, and has an accumulated deficit. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that casts significant doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. As part of our audits, we are required to obtain an understanding of the Company’s internal controls over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the Board of Directors and that: (i) relate to accounts or disclosures that are material to the financial statements; and (ii) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
| /s/ SATURNA GROUP CHARTERED PROFESSIONAL ACCOUNTANTS LLP |
Saturna Group Chartered Professional Accountants LLP
We served as the Company’s auditor since 2017.
In January 2023, we became the predecessor auditor.
Vancouver, Canada
March 8, 2022, except as to Note 1(c) which is as of October 19, 2022
F-5
CLEARMIND MEDICINE INC.
Consolidated Statements of Financial Position
(Expressed in United States Dollars)
| October 31, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Other receivables | ||||||||
| Short-term investment (Note 5) | ||||||||
| Prepaid expenses | ||||||||
| Related parties (Note 6b) | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment | ||||||||
| Intangible assets (Note 3) | ||||||||
| Restricted cash | ||||||||
| Right-of-use asset (Note 4) | ||||||||
| Deferred offering costs | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related parties (Note 6) | ||||||||
| Derivative warrants liabilities (Note 7) | ||||||||
| Derivative liability (Note 8d (iii)) | ||||||||
| Lease liability (Note 4) | ||||||||
| Total liabilities | $ | $ | ||||||
| Shareholders’ equity (deficit) | ||||||||
| Share capital and share premium (Note 8) | ||||||||
| Warrants (Note 9) | ||||||||
| Share-based payment reserve (Notes 10,11) | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and shareholders’ equity (deficit) | $ | $ | ||||||
Approved and authorized for issuance on behalf of the Board of Directors on January 29, 2024:
| /s/ “Alan Rootenberg” | /s/ “Adi Zuloff-Shani” | |
| Alan Rootenberg, CFO | Adi Zuloff-Shani, CEO |
(The accompanying notes are an integral part of these consolidated financial statements)
F-6
CLEARMIND MEDICINE INC.
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in United States Dollars)
| Year ended October 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Operating expenses | ||||||||||||
| General and administrative (Note 17) | $ | $ | $ | |||||||||
| Research and development, net (Note 18) | ||||||||||||
| Total operating expenses | ||||||||||||
| Impairment of exploration and evaluation assets | – | – | ( | ) | ||||||||
| Finance expenses | ||||||||||||
| Changes in fair value of derivative warrants liabilities (Note 7) | ( | ) | ||||||||||
| Unrealized loss on short-term investment (Note 5) | ( | ) | ( | ) | ||||||||
| Foreign exchange loss | ( | ) | ( | ) | ( | ) | ||||||
| Other finance income (expense), net | ( | ) | ||||||||||
| Change in fair value of derivative liability (Note 8d (iii)) | ( | ) | ||||||||||
| Total finance expenses | ( | ) | ( | ) | ( | ) | ||||||
| Other income | ||||||||||||
| Dividend received | ||||||||||||
| Total other income | ||||||||||||
| Loss Before taxes | ( | ) | ( | ) | ( | ) | ||||||
| Tax expenses | ( | ) | ( | ) | ||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive loss for the year | ||||||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||||||
| Foreign exchange differences on translation of foreign operations | ( | ) | ||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (*) |
(The accompanying notes are an integral part of these consolidated financial statements)
F-7
CLEARMIND MEDICINE INC.
Statements of Changes in Shareholders’ Equity (Deficit)
(Expressed in United States Dollars)
| Share
capital and share premium | Share-based | Accumulated other | Total | |||||||||||||||||||||||||
| Number of shares (*) | Amount | Warrants | payment reserve | comprehensive income | Accumulated deficit | shareholders’ equity (deficit) | ||||||||||||||||||||||
| Balance, October 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net loss for the year | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Issuance of common shares in private placement | ||||||||||||||||||||||||||||
| Share issuance costs | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Issuance of shares in private placement | – | |||||||||||||||||||||||||||
| Share issuance costs | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Share-based compensation | – | |||||||||||||||||||||||||||
| Balance, October 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net loss for the year | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation gain | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Total comprehensive loss for the year | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Common shares issued for services | ||||||||||||||||||||||||||||
| Units issued for cash | ||||||||||||||||||||||||||||
| Issuance costs | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Units issued for short-term investment | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | ||||||||||||||||||||||||||
| Balance, October 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Net loss for the year | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Issuance of common shares (Note 8c(i)) | ||||||||||||||||||||||||||||
| Common shares and warrants issued to Medigus (Note 8c(i)) | ||||||||||||||||||||||||||||
| Issuance of common shares, pre-funded warrants and warrants (Note 8c(iii)) | ||||||||||||||||||||||||||||
| Issuance of common shares upon vesting of restricted stock units (Note 8c(ii,v,vii)) | ( | ) | ||||||||||||||||||||||||||
| Issuance of common shares, pre-funded warrants and warrants (Note 8c(viii)) | ||||||||||||||||||||||||||||
| Exercise of warrants (Note 7a) | ||||||||||||||||||||||||||||
| Common shares for services | ( | ) | ||||||||||||||||||||||||||
| Share-based compensation (Notes 10, 11b(i)) | – | |||||||||||||||||||||||||||
| Balance, October 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| (*) |
(The accompanying notes are an integral part of these consolidated financial statements)
F-8
CLEARMIND MEDICINE INC.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
| Year ended October 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Operating activities | ||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Adjustments for: | ||||||||||||
| Amortization of intangible assets | ||||||||||||
| Amortization of right-of-use asset | ||||||||||||
| Interest on lease liability | ||||||||||||
| Exchange rate differences | ||||||||||||
| Issuance costs allocated to derivate warrants liability | ||||||||||||
| Depreciation of property and equipment | ||||||||||||
| Impairment of exploration and evaluation assets | ||||||||||||
| Changes in fair value of derivative liabilities | ||||||||||||
| Share-based compensation | ||||||||||||
| Unrealized loss on short-term investment | ||||||||||||
| Tax expenses | ||||||||||||
| Changes in working capital: | ||||||||||||
| Decrease (increase) in other receivable | ( |
) | ( |
) | ||||||||
| Decrease (increase) in prepaid expenses | ( |
) | ( |
) | ||||||||
| Increase (decrease) in accounts payable and accrued liabilities | ( |
) | ||||||||||
| Increase (decrease) in due to / from related parties | ( |
) | ||||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ( |
) | ||||||
| Investing activities | ||||||||||||
| Acquisition of property and equipment | ( |
) | ( |
) | ||||||||
| Acquisition of intangible assets | ( |
) | ||||||||||
| Exploration and evaluation asset expenditures | ( |
) | ||||||||||
| Changes in restricted cash | ( |
) | ( |
) | ||||||||
| Net cash used in investing activities | ( |
) | ( |
) | ( |
) | ||||||
| Financing activities | ||||||||||||
| Proceeds from issuance of common shares and warrants, net of issuance costs (Notes 7, 8 c (i,iii,viii)) | ||||||||||||
| Proceeds received from exercise of warrants (Note 7) | ||||||||||||
| Repayment of lease liabilities | ( |
) | ( |
) | ||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | ( |
) | ( |
) | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( |
) | ||||||||||
| Cash and cash equivalents at beginning of year | ||||||||||||
| Cash and cash equivalents at end of year | $ | $ | $ | |||||||||
| Supplementary disclosure of cash flow information: | ||||||||||||
| Cash received for interest | $ | $ | $ | |||||||||
| Dividend received | ||||||||||||
| Cash paid for taxes | ||||||||||||
| Non-cash financing and investing activities | ||||||||||||
| Common shares issued to Medigus (Note 8d(iii)) | ||||||||||||
| Shares obtained from Medigus in issuance of shares and warrants | $ | $ | $ | |||||||||
| Deferred offering costs included in non-current assets | $ | $ | $ | |||||||||
| Right of use assets obtained in exchange for lease liabilities | $ | $ | $ | |||||||||
F-9
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 1. | Nature of Operations and Going Concern |
| a. | Clearmind Medicine Inc. (the “Company”) was incorporated in the province of British Columbia on July 18, 2017. The Company is a clinical pharmaceutical company approaching phase 1 clinical trials, that develops novel psychedelic medicines to solve widespread, yet under-served, health problems. The Company’s head office is located at Suite 101 -1220 West 6th Avenue, Vancouver, BC, V6H 1A5. The Company’s Israeli subsidiary (Clearmindmed Ltd.) provides research and development services to the Company. |
On November 14, 2022, the Company completed
a public offering for aggregate gross proceeds of $
On April 6, 2023, the Company completed an underwritten public
offering for aggregate gross proceeds of $
On September 18, 2023, the Company completed an underwritten
public offering for aggregate gross proceeds of $
On January 16, 2024, the Company completed a registered direct
and private placement for aggregate gross proceeds of $
| b. | Going concern |
These consolidated financial statements have been prepared
on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal
course of business. For the year ended October 31, 2023, the Company has not generated any revenues and has negative cash flow from operations
of $
| c. | Reverse share split |
On September 30, 2022, the Company’s Board of Directors
(the “Board”) approved a 1-for-30 reverse split of its issued and outstanding common shares, effective as of September
30, 2022, pursuant to which holders of the Company’s common shares received
On November 28, 2023, the Company’s Board of Directors (the “Board”) approved a 1-for-30 reverse split of its issued and outstanding common shares, effective as of November 28, 2023, such that each thirty of the Company’s common shares, no par value, were consolidated into one common share, no par value.
All issued and outstanding common shares or instruments convertible into common shares contained in these financial statements have been retroactively adjusted to reflect the reverse share split for all periods presented, unless explicitly stated otherwise.
| d. | Functional Currency and Presentation Currency |
As a result of the Company’s listing on the NASDAQ which was completed in November 2022, the primary economic environment and generation and use of cash flows of the Company became mainly denominated in U.S dollars. Consequently, effective on November 1, 2022, the Company changed both its functional currency and the presentation currency of its consolidated financial statements from the Canadian dollar to the U.S dollar.
Clearmind Medicine Inc. is in its research and development stages and has not generated revenues since inception. In consideration of the indicators in IAS 21, the Company determined that the new and future financing activities of the Company and the currency in which cash and cash equivalents are retained were relevant factors indicating that the Canadian dollar will not be the currency to reflect the principal economic environment in which the Company will generate and expend its cash.
Under IAS 21, a change in an entity’s functional currency
is applied prospectively from the date of the change. The Company applied the practical expedient to apply the transaction procedures
applicable to the new functional currency prospectively beginning on November 1, 2022.
F-10
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 1. | Nature of Operations and Going Concern (continued) |
The change in the presentation currency of the consolidated financial statement was accounted for as a change in accounting policy and applied retrospectively, as if the new presentation currency had always been the presentation currency of the consolidation financial statements. Consequently, comparative figures for the years prior to the effective date of November 1, 2022 have been restated to the new presentation currency using the exchange rate in effect on effective date of the change.
Following the change in the Company's functional currency, the Company elected, as an accounting policy, not to reclassify instruments which, had had the change in functional currency occurred before initial recognition of the instrument, would have changed its classification.
| e. | On October 7, 2023, an unprecedented attack was launched against Israel by terrorists from the Hamas terrorist organization that infiltrated Israel’s southern border from the Gaza Strip and in other areas within the State of Israel attacking civilians and military targets while simultaneously launching extensive rocket attacks on the Israeli population, which led to the declaration of the ‘Iron Swords’ War (the “War”). The War is on-going as of the issuance date of these financial statements. The Company’s clinical trials, the laboratory that supports such clinical trials and the Contract Research Organization (CRO) are based in Israel. The extent to which the War may impact the Company’s financial condition, results of operations, or liquidity is uncertain, and as of the date of issuance of these consolidated financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities as of October 31, 2023. |
| 2. | Significant Accounting Policies |
| a. | Basis of Presentation |
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) on a going concern basis.
These consolidated financial statements include the accounts
of the Company and its
These consolidated financial statements have been prepared on a historical cost basis, except for financial assets and liabilities (including derivatives) which are presented at fair value through profit or loss (“FVTPL”), and are presented in United States dollars, which is the Company’s functional currency as of November 1, 2022.
| b. | Significant Accounting Estimates and Judgments |
The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Significant Estimates
Share-based Compensation
Fair values are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company’s stock options.
Warrant Liability
The Company analyses warrants issued to determine whether they meet the classification as liabilities or equity. Derivative warrant liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations. The Company uses a fair valuation specialist to estimate the value of these instruments using the Black and Scholes and binomial pricing model.
The key assumptions used in the models are the expected future volatility in the price of the Company's shares, the expected life of the warrants and the probability of any future adjustment event.
F-11
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
Significant Judgments
The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:
Going Concern
The application of the going concern assumption requires management to take into account all available information about the future, which is at least but not limited to, 12 months from the year end of the reporting period. The Company is aware that material uncertainties related to events or conditions raise substantial doubt upon the Company’s ability to continue as a going concern.
| c. | Cash and Cash Equivalents |
The Company considers all highly liquid instruments with
a maturity of
| d. | Provisions |
Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation; and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.
| e. | Property and Equipment |
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to the consolidated statements of operations and comprehensive loss during the period in which they are incurred.
| Research and development equipment | ||
| Computer equipment |
| f. | Intangible Assets |
Intangible assets consist of patents and patent applications acquired to be used in drug research programs. Intangible assets are carried at cost less accumulated amortization and impairment losses and are capitalized when the costs can be measured reliably, and it is probable that future economic reliably benefits that are attributable to the asset will flow to the Company. The Company amortizes patents over the term of the patent.
F-12
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| g. | Impairment of Non-Current Assets |
At each reporting date, the Company reviews the carrying amounts of its non-current assets to determine whether there are any indications of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.
Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit (“CGU”) to which the asset belongs. The recoverable amount is determined as the higher of fair value less direct costs to sell and the asset’s value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Estimated future cash flows are calculated using estimated recoverable reserves, estimated future commodity prices and the expected future operating and capital costs. The pre-tax discount rate applied to the estimated future cash flows reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its recoverable amount through an impairment charge to the consolidated statement of operations and comprehensive loss.
Assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that the impairment may have reversed. When an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of depreciation, depletion and amortization) had no impairment loss been recognized for the asset or CGU in prior periods. A reversal of impairment is recognized as a gain in the consolidated statement of operations and comprehensive loss.
F-13
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| h. | Financial Instruments |
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the respective instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are included in the initial carrying value of the related instrument and are amortized using the effective interest method. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in the consolidated statement of operations and comprehensive loss.
Financial assets
The classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Financial assets at FVTPL
Financial assets are classified as FVTPL when the financial asset is either held for trading or it is designated as FVTPL. A financial asset is classified as held for trading if:
| ● | it has been acquired principally for the purpose of selling it in the near term; or |
| ● | on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking. |
Financial assets at amortized cost
Financial assets at amortized cost are non-derivative financial assets which are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. Subsequent to initial recognition, financial assets are measured at amortized cost using the effective interest method, less any impairment.
F-14
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| h. | Financial Instruments (continued) |
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized as the proceeds received, net of direct issue costs.
Other financial liabilities
All financial liabilities are measured subsequently at amortized cost using the effective interest method or at FVTPL.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination, (ii) held for trading or (iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if either:
| ● | It has been acquired principally for the purpose of repurchasing it in the near term | |
| ● | On initial recognition it is part of a portfolio of identified financial instruments that the group manages together and has a recent actual pattern of short-term profit-taking | |
| ● | It is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument |
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognized in profit or loss.
Financial liabilities measured subsequently at amortized cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
F-15
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| i. | Income Taxes |
Current income tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred income tax
Deferred income tax is provided using the statement of financial position method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
| j. | Foreign Currency Translation |
The Company’s reporting currency is the United States dollar. The functional currency for the Company and its subsidiary is the currency of the primary economic environment in which the entity operates. As of November 1, 2023, the functional currency of the Company and its Canadian and Israeli subsidiaries is the United States dollar.
Transactions denominated in currencies other than the functional currency are translated using the exchange rate in effect on the transaction date or at the annual average rate. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange in effect at the consolidated statement of financial position date. Non-monetary items are translated using the historical rate on the date of the transaction. Foreign exchange gains and losses are included in the consolidated statement of operations and comprehensive loss.
F-16
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| k. | Share-based Payments |
The grant date fair value of share-based payment awards granted to employees is recognized as stock-based compensation expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Where equity instruments are granted to parties other than employees, they are recorded by reference to the fair value of the services received. If the fair value of the services received cannot be reliably estimated, the Company measures the services received by reference to the fair value of the equity instruments granted, measured at the date the counterparty renders service. The fair value of services received from consultants cannot be reliably measured; therefore, the fair value of the underlying equity instruments was utilized for all periods presented.
All equity-settled share-based payments are reflected in share-based payment reserve, unless exercised. Upon exercise, shares are issued and the amount reflected in share-based payment reserve is credited to share capital, adjusted for any consideration paid.
| l. | Restricted Share Units |
The Company recognizes compensation expense for restricted share units (“RSU’s”) awarded based on the grant-date fair value of the common shares. The grant-date fair value, which is determined by multiplying the Company’s share price by the number of RSU’s granted, is amortized over the vesting period and is included in compensation expense with a corresponding increase in the share-based payment reserve. If RSU’s are for services that have been provided and are non-cancellable, the Company recognizes the full cost of the RSU’s on the date of grant. The amount recognized is adjusted to reflect the number of RSU’s expected to eventually vest.
| m. | Leases |
The Company’s Israeli subsidiary leased an office through to June 30, 2023. At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company reassesses whether a contract is, or contains, a lease only if the terms and conditions of the contract are changed.
At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date, including, inter alia, the exercise price of a purchase option if the Company is reasonably certain to exercise that option. Simultaneously, the Company recognizes a right-of-use (“ROU”) asset in the amount of the lease liability.
The discount rate applied by the Company is the rate of
interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the ROU asset in a similar economic environment. The weighted average of lessee’s incremental annual
borrowing rate applied to the lease liabilities as of June 30, 2023 was estimated at
F-17
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| m. | Leases (continued) |
The lease term is the non-cancellable period for which the Company has the right to use an underlying asset, together with both, the periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
After the commencement date, the Company measures the ROU asset applying the cost model, less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability.
Assets are depreciated by the straight-line method over the estimated useful lives of the ROU asset or the lease period, whichever is shorter.
Interest on the lease liability is recognized in profit or loss in each period during the lease term in an amount that produces a constant periodic rate of interest on the remaining balance of the lease liability.
The Company applied the following practical expedients:
| ● | Non-lease components: practical expedient by class of underlying asset not to separate non-lease components (services) from lease components and, instead, account for each lease component and any associated non lease components as a single lease component. |
| ● | The practical expedient for short-term leases is applied. |
| n. | Employee benefits |
| 1) | Pension and retirement benefit obligations |
The Company operates a number of post-employment defined contribution plans.
A defined contribution plan is a program that benefits an employee after termination of employment, under which the Company regularly makes fixed payments to a separate and independent entity so that the Company has no legal or constructive obligation to pay additional contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The fund assets are not included in the Company’s statement of financial position.
The Company operates pension and severance compensation
plans subject to Section 14 of the Israeli Severance Pay Law. The Option Plans are funded through payments to insurance companies or
pension funds administered by trustees. In accordance with its terms, the Option Plans meet the definition of a defined contribution
plans as defined above. The expenses in respect of defined contribution plans during the years ended October 31, 2023, 2022 and 2021
were $
| 2) | Vacation and recreation pay |
Under Israeli law, each employee is entitled to vacation days and recreation pay, both computed on an annual basis. The entitlement is based on the period of employment. The Company records a liability and an expense for vacation and recreation pay, based on the benefit accumulated for each employee.
F-18
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| o. | Research and Development |
Research costs are charged to operations as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized only if development costs can be measured reliably, the product is technically and commercially feasible, future economic benefits are probable, and the Company intends to or has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labor and overhead costs that are directly attributable to preparing the asset for its intended use and borrowing costs on qualifying assets. Other development expenditures are recognized in the consolidated statement of operations and comprehensive loss as incurred. The Company has not capitalized any development costs for the years ended October 31, 2023, 2022 and 2021.
| p. | Loss Per Share |
Basic loss per share is computed using the weighted average
number of common shares outstanding during the period. The treasury stock method is used for the calculation of diluted loss per share,
whereby all “in the money” stock options and share purchase warrants are assumed to have been exercised at the beginning
of the period and the proceeds from their exercise are assumed to have been used to purchase common shares at the average market price
during the period. When a loss is incurred during the period, basic and diluted loss per share is the same as the exercise of stock options
and share purchase warrants is considered to be anti-dilutive. As of October 31, 2023, the Company had
| q. | The Company capitalizes certain legal and other third-party fees that are directly related to the Company’s in- process equity financing until such financing is consummated. After consummation of such equity financing, these costs are recorded as a reduction of the respective gross proceeds. Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are written off to operating expenses. Where the financing includes both an equity and liability component, pro-rata issuance costs relating to the liability component are charged to the statement of operations. |
| r. | Accounting Standards Issued But Not Yet Effective |
| i) | Amendments to IAS 1 Presentation of Financial Statements—Classification of Liabilities as Current or Non-current |
The IASB issued a narrow-scope amendment to IAS 1, in January 2020, to clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. The amendment could affect the classification of liabilities, particularly for entities that previously considered management’s intentions to determine classification and for some liabilities that can be converted into equity. Inter alia, the amendment requires the following:
Liabilities are classified as non-current if the entity has a substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers to unconditional rights. The assessment determines whether a right exists, but it does not consider whether the entity will exercise the right.
’Settlement’ is defined as the extinguishment of a liability with cash, other economic resources or an entity’s own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument.
The amendments are applied retrospectively for annual periods beginning on or after 1 January 2024, with early application permitted.
F-19
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Significant Accounting Policies (continued) |
| ii) | Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements - Disclosure of Accounting Policies |
The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements.
The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.
The IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.
The amendments are applied for annual periods beginning on or after January 1, 2023.
| 3. | Intangible Assets |
On May 4, 2021, the Company entered into an assignment agreement to
acquire certain intellectual property including a patent for “Binge Behavior Regulators,” which has been granted in the U.S.,
Europe, China and India, with pending divisional applications in Europe and the U.S, and a patent for “Alcohol Beverage Substitute,”
which has been approved for a European patent, with pending applications in the U.S., China and India. In consideration for the acquired
intellectual property, the Company paid $
F-20
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 4. | Leases |
On July 1, 2021, the Company entered into a lease agreement
(“2021 Lease”) with Scisparc Ltd, a related party (“Scisparc”) and a third party for a total area of approximately 240m2,
of which the Company occupies approximately 120m2 for the Company’s offices, in Tel Aviv, Israel.
The lease expired on June 30, 2023. As of October
31, 2023 the Company and SciSparc were in the process of negotiating the terms of a new lease contract. On December 25, 2023, the rental
agreement was renewed for a further 18 months. The Company’s base rent was increased to ILS
As of October 31, 2023, the Company has a pledge on its
short-term deposit in favor of an Israeli bank in the amount of approximately $
| ROU office space | ||||
| Balance, October 31, 2022 | $ | |||
| Addition | ||||
| Accumulated depreciation | ( | ) | ||
| Foreign currency fluctuation | ( | ) | ||
| Balance, October 31, 2023 | $ | |||
| Lease liability | ||||
| Balance, October 31, 2022 | $ | |||
| Addition | ||||
| Lease payments | ( | ) | ||
| Interest expense | ||||
| Foreign currency translation | ( | ) | ||
| Balance, October 31, 2023 | $ | |||
Amounts recognized in profit or loss
| Year ended | ||||
| October 31, | ||||
| 2023 | ||||
| Depreciation | $ | |||
| Interest | ||||
| Foreign currency fluctuation | ||||
| $ | ||||
F-21
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 5. | Short-term Investment |
Pursuant to the Share Exchange Agreement (as defined in
Note 8d(iii)) with Medigus Ltd (“Medigus”), on February 14, 2022, the Company received
| October 31, 2022 | Additions | Unrealized loss | October 31, 2023 | |||||||||||||
| Medigus Ltd. – Shares | $ | $ | $ | ( | ) | $ | ||||||||||
| October 31, 2021 | Additions | Unrealized loss | October 31, 2022 | |||||||||||||
| Medigus Ltd. – Shares | $ | $ | $ | ( | ) | $ | ||||||||||
| * | The share amount is following the Medigus 1:15 share split from November 14, 2022. |
F-22
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 6. | Related Party Transactions |
| a. | Compensation to key management personnel |
| (i) |
| Year ended | Year ended | Year ended | ||||||||||
| October 31, | October 31, | October 31, | ||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Officers: | ||||||||||||
| Payroll and other short-term benefits | $ | $ | $ | |||||||||
| Consulting fees | ||||||||||||
| Share based compensation | ||||||||||||
| $ | $ | $ | ||||||||||
| Directors: | ||||||||||||
| Directors’ fees | $ | $ | $ | |||||||||
| Share based compensation | ||||||||||||
| $ | $ | $ | ||||||||||
| (ii) |
| October 31, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Amounts owed to officers | $ | $ | ||||||
| Amounts owed to directors | ||||||||
| $ | $ | |||||||
| b. |
On March 7, 2022, the Company signed an agreement with SciSparc Ltd (“SciSparc”), pursuant to which the Company and SciSparc agreed to cooperate in conducting a feasibility study using certain molecules developed by each party (the “Cooperation Agreement”). Certain of the Company’s officers and directors currently operate, manage or are engaged as officers and/or directors of SciSparc.
In June 2023, the Company entered into a research agreement with the Hebrew University of Jerusalem to evaluate our and SciSparc’s combination treatment for obesity and metabolic syndrome.
To date, the
collaboration has resulted in the filing of nine patent applications. To
the extent the parties determine to proceed to a commercial cooperation, they will enter into a joint venture where the parties share
the economics and rights on a
For the year ended October 31, 2023, the Company incurred research
and development expenses conducted within the framework of the Cooperation Agreement in the amount of $ |
| c. | The Company shares office space with SciSparc and participates for paying office expenses– see Note 4. |
F-23
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 7. | Derivative warrants liabilities |
| a. | On April 6, 2023, the Company issued |
On September 24, 2023, following the September 2023 Public
Offering, which included the offering of common shares at a price lower than the exercise price of the April 2023 Warrants, the exercise
price of the April 2023 Warrants was reduced to $
During the period between October 17, 2023 and October 20,
2023,
| b. | On September 18, 2023, the Company issued |
| c. | During the year ended October 31, 2023, the Company recorded a loss on
the revaluation of the total derivative warrants liabilities of $ |
| d. |
| October 31, 2023 | ||||
| Share Price | $ | |||
| Exercise Price | $ | |||
| Expected life | ||||
| Risk-free interest rate | % | |||
| Dividend yield | % | |||
| Expected volatility | % | |||
| e. |
| Balance as of November 1, 2022 | $ | |||
| Issuance of April 2023 Warrants | ||||
| Issuance of September 2023 Warrants | ||||
| Exercise of warrants | ( | ) | ||
| Changes in fair value of warrants | ||||
| Balance as of October 31, 2023 | $ |
F-24
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 8. | Share Capital |
| a. | The Company’s authorized share capital is unlimited common shares without par value share. As of October 31, 2023, the number of common shares issued and outstanding is |
| b. | On September 30, 2022 and November 28, 2023, the Company effected a 1-for-30 share consolidation (“Reverse Share Split”) of its issued and outstanding common shares. All share amounts and instruments convertible into common shares prior to the date of the reverse share split have been retroactively restated for all periods presented. |
| c. | Share transactions during the year ended October 31, 2023: |
| (i) | On November 14, 2022, the Company completed an underwritten public offering of |
In addition, the Company granted Aegis
Capital Corp. (“Aegis”), who acted as the underwriters for the deal, a 45-day option to purchase up to
Aegis received
| Risk-free interest rate | % | |||
| Expected life (in years) | ||||
| Expected volatility | % |
In connection with the offering, the Company’s common shares were approved for listing on the Nasdaq and began trading on the Nasdaq (in addition to the CSE) under the symbol “CMND” on November 15, 2022.
Following the public offering and pursuant to the Medigus SPA
(see note 8d(iii)), Medigus was entitled to receive
| (ii) | On January 16, 2023, |
On February 22, 2023,
F-25
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 8. | Share Capital (continued) |
| (iii) | On April 6, 2023, the Company completed an underwritten public offering of |
Net proceeds from the offering were
$
| (iv) | On May 23, 2023, |
| (v) | On June 1, 2023, |
| (vi) | On July 10, 2023, |
| (vii) | On August 28, 2023, |
| (viii) | On September 18, 2023 the Company completed an underwritten public offering of |
| (ix) | During the period between October 17, 2023 and October 20, 2023, |
F-26
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 8. | Share Capital (continued) |
| d. | Share transactions during the year ended October 31, 2022: |
| (i) | On November 26, 2021, the Company issued |
| (ii) | On February 14, 2022, the Company issued |
| (iii) | On February 14, 2022, the Company completed a share purchase agreement with Medigus, whereby the Company issued a total of |
Pursuant to the Cash Financing, the Company
issued
In connection with the Cash Financing, the Company incurred
finder’s fees of $
Pursuant to the Share Exchange, the Company
issued
In connection with the Share Exchange,
the Company incurred finder’s fees of $
On June 29, 2022, the Company signed an amendment to the Medigus Agreement (“Medigus Amended Agreement”), pursuant to which, in the event of an initial public offering, Medigus would receive, in respect of the Cash Financing, for no additional consideration, the number of shares necessary to maintain an ownership percentage of the Company’s shares equal to the level of ownership it had at the time of the Medigus Agreement.
As of October 31, 2022, the Company recorded
the fair value of this derivative financial liability in the amount of $
| e. | Share transactions during the year ended October 31, 2021: |
| (i) | On April 9, 2021, the Company issued |
| (ii) | On June 22, 2021, the Company issued |
F-27
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 9. | Share Purchase Warrants |
| Number of warrants | Weighted average exercise price | |||||||
| Balance, October 31, 2021 | $ | |||||||
| Issued (i) | (*) | |||||||
| Balance, October 31, 2022 | ||||||||
| Issuance of underwriter warrants (Note 8c (i)) | ||||||||
| Issuance of April 2023 warrants (Note 7a) | (**) | |||||||
| Issuance of September 2023 warrants (Note 7b) | ||||||||
| Issuance of Medigus warrants (Note 8c (i)) | (*) | |||||||
| Expiration of warrants | ( | ) | ||||||
| Exercise of warrants (Note 7a) | ( | ) | ||||||
| Balance, October 31, 2023 | $ | |||||||
| Number of shares to be issued from the exercise of warrants | (***) | |||||||
| (*) |
| (**) |
| (***) |
| (i) | On February 14, 2022, the Company completed the Medigus Agreement, whereby the Company completed the Cash Financing and the Share Exchange. Each unit was comprised of one common share and one warrant, with each warrant exercisable at $ |
| Number of warrants outstanding | Number of shares
to be issued from the exercise of warrants | Exercise price | Exercise price (USD) | Expiry date | ||||||||||||
| C$ | $ | |||||||||||||||
| $ | $ | |||||||||||||||
| $ | $ | |||||||||||||||
| C$ | $ | |||||||||||||||
| $ | $ | |||||||||||||||
| (*) | ||||||||||||||||
| (*) |
F-28
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 10. | Stock Options |
| a. | On September 1, 2021, the Company implemented a stock option plan pursuant to which stock options may be granted to directors, officers, employees, and consultants of the Company. |
| b. |
| Number of options | Weighted (C$) | Weighted (USD$) | ||||||||||
| Outstanding, October 31, 2021 | C$ | $ | ||||||||||
| Granted (i) | ||||||||||||
| Cancelled (ii) | ( | ) | ||||||||||
| Outstanding, October 31, 2022 | C$ | $ | ||||||||||
| Granted (iii, iv, v) | ||||||||||||
| Outstanding, October 31, 2023 | C$ | $ | ||||||||||
| Exercisable, October 31, 2023 | C$ | $ | ||||||||||
| i) |
| ii) |
| iii) |
| iv) |
| v) |
F-29
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 10. | Stock Options (continued) |
| c. |
| Outstanding | Exercisable | |||||||||||||||||||||||||
| Number of stock options | Weighted average remaining contractual life (years) | Weighted average exercise price (C$) | Weighted average exercise price (USD$) | Number of stock options | Weighted average exercise price (C$) | Weighted average exercise price (USD$) | ||||||||||||||||||||
| C$ | $ | C$ | $ | |||||||||||||||||||||||
| C$ | $ | C$ | $ | |||||||||||||||||||||||
| Year ended October 31, | ||||||||
| 2023 | 2022 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected life (in years) | ||||||||
| Expected volatility | % | % | ||||||
| d. | The portion of the total fair value of stock options expensed during the year ended October 31, 2023, was $ |
F-30
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 11. | Restricted Share Units |
| a. | On August 4, 2021, the Company approved an RSU plan, which is designed to provide certain directors, officers, employees, and consultants of the Company with the opportunity to acquire RSU’s of the Company. Each unit is equivalent in value to a common share and upon vesting results in the holder thereof being issued, at the discretion of the Board, either (i) a common share, or (ii) an amount of cash equal to the fair market value of a common share. |
| b. |
| Number of RSUs | Weighted average issue price (C$) | Weighted average issue price (USD$) | ||||||||||
| Balance, October 31, 2021 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Vested | ( | ) | ||||||||||
| Balance, October 31, 2022 | $ | $ | ||||||||||
| Granted (i) | ||||||||||||
| Vested | ( | ) | ||||||||||
| Balance, October 31, 2023 | $ | $ | ||||||||||
| (i) | During the year ended October 31, 2023, the Company issued |
| c. | During the year ended October 31, 2023, the Company recognized share-based compensation of $( |
| 12. | Financial Instruments and Risk Management |
| a. | Fair Values |
Fair value measurements are classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The fair value hierarchy has the following levels:
| ● | Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| ● | Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and |
| ● | Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
F-31
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 12. | Financial Instruments and Risk Management (continued) |
| Fair Value Measurements Using | ||||||||||||||||
| Quoted prices in active markets for identical instruments (Level 1) |
Significant other observable inputs (Level 2) |
Significant unobservable inputs (Level 3) |
Balance October 31, 2023 |
|||||||||||||
| Short-term investment | $ | $ | $ | $ | ||||||||||||
| Derivative warrants liability | ||||||||||||||||
| Fair Value Measurements Using | ||||||||||||||||
| Quoted prices in active markets for identical instruments (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Balance October 31, 2022 | |||||||||||||
| Short-term investment | $ | $ | $ | $ | ||||||||||||
| Derivative liability | ||||||||||||||||
The fair value of other assets and liabilities, which include cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities, and amounts due to / from related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.
| b. | Credit Risk |
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.
| c. | Foreign Exchange Rate Risk |
Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency. The Company’s subsidiary operates in Israel and has certain monetary financial instruments denominated in NIS and CAD. The Company has not entered into foreign exchange rate contracts to mitigate this risk.
F-32
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 12. | Financial Instruments and Risk Management (continued) |
| c. | Foreign Exchange Rate Risk (continued) |
| Cash | $ | |||
| Amounts receivable | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Due to related parties | ( | ) | ||
| Total foreign currency financial assets and liabilities | $ | ( | ) | |
| Impact of a | $ | ( | ) |
| d. | Interest Rate Risk |
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The fair value of the warrant liability can fluctuate depending on the fluctuation in the risk free interest rate.
| e. | Liquidity Risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner.
| October 31, 2023 | Total | Within 1 year | Within 2-5 years | |||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | |||||||||
| Due to related parties | ||||||||||||
| $ | $ | $ | ||||||||||
| October 31, 2022 | Total | Within 1 year | Within 2-5 years | |||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | |||||||||
| Due to related parties | ||||||||||||
| Lease liability | ||||||||||||
| $ | $ | $ | ||||||||||
F-33
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 13. | Capital Management |
The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued share capital and share premium, warrants and share-based payment reserve.
The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances.
The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended October 31, 2022.
| 14. | Commitments |
The Company enters into contracts in the ordinary course of business with contract research organizations for clinical trials and clinical supply manufacturing and with vendors for non-clinical research studies and other services and products for operating purposes, which generally provide for termination upon 30 to 120 days’ notice or less, and therefore are cancelable contracts and not considered as commitment or purchase obligations.
F-34
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 15. | Segmented Information |
As of October 31, 2023, the Company has one operating segment, research and development of psychedelic medicine, which takes place primarily in Israel.
| 16. | Income Taxes |
Tax rates applicable to the Company:
The combined Canadian federal and provincial statutory
income tax rate is
| 2023 $ |
2022 $ |
2021 $ |
||||||||||
| Canadian statutory income tax rate | % | % | % | |||||||||
| Income tax recovery at statutory rate | ( |
) | ( |
) | ( |
) | ||||||
| Tax effect of: | ||||||||||||
| Permanent differences and other | ( |
) | ||||||||||
| Tax rate difference for foreign jurisdiction | ||||||||||||
| Change in unrecognized deferred income tax assets | ||||||||||||
| Income tax provision | ||||||||||||
F-35
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 16. | Income Taxes (continued) |
| $ | ||||
| 2037 | ||||
| 2038 | ||||
| 2039 | ||||
| 2040 | ||||
| 2041 | ||||
| 2042 | ||||
| 2043 | ||||
As of October 31, 2023, the Company has a non-capital loss
carried forward of approximately $
Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.
| 17. | General and Administrative Expenses |
| Year ended | Year ended | Year ended | ||||||||||
| October 31, | October 31, | October 31, | ||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Professional fees | $ | $ | $ | |||||||||
| Investor relations | ||||||||||||
| Share-based compensation (Notes 6, 10 and 11) | ||||||||||||
| Consulting fees (Note 6) | ||||||||||||
| Insurance | ||||||||||||
| Transfer agent and regulatory fees | ||||||||||||
| Depreciation of ROU asset | ||||||||||||
| Salaries and benefits (Note 6) | ||||||||||||
| Office and miscellaneous | ||||||||||||
| Depreciation of property and equipment | ||||||||||||
| Total general and administrative | $ | $ | $ | |||||||||
F-36
CLEARMIND MEDICINE INC.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 18. | Research and Development, net |
| Year ended | Year ended | Year ended | ||||||||||
| October 31, | October 31, | October 31, | ||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Research and preclinical studies | $ | $ | $ | |||||||||
| Salaries, regulatory, professional and other expenses | ||||||||||||
| Share-based compensation (Notes 6, 10 and 11) | ||||||||||||
| Reimbursements (Note 6) | ( | ) | ( | ) | ||||||||
| Amortization of intangible assets | ||||||||||||
| Total research and development, net | $ | $ | $ | |||||||||
| 19. | Subsequent Events |
| a. | Reverse share split – see note 1(c). |
| b. | Warrant exercises |
As a result of the Reverse Share Split, on November 28, 2023,
pursuant to the April 2023 Warrant Adjustments and September 2023 Warrant Adjustments, the exercise price of the April 2023 Warrants and
September 2023 Warrants was adjusted to $
Between November 30, 2023 and December 4, 2023, April 2023
Warrants and September 2023 Warrants were exercise into
On December 5, 2023, the exercise price of the April 2023
Warrants and September 2023 Warrants was further adjusted to $
On December 5, 2023, April 2023 Warrants and September
2023 Warrants were exercised into
On January 21, 2024, following a registered direct and
private placement (See below), the April 2023 Warrants and September 2023 Warrant exercise prices were further adjusted to $
| c. | New lease agreement – see note 4. |
| d. | Registered direct and private placement |
On January 16, 2024, the Company completed a registered
direct and private placement (the “January 2024 Offering”) of common shares at a price to the public of $
| e. | Omnibus Equity Inventive Plan |
On November 14, 2023, the shareholders of the Company
approved the Omnibus Equity Incentive Plan, or the Omnibus Plan. Pursuant to the Omnibus Plan, the Company is authorized to grant options
or restricted share units (“RSUs” and together with “Options”, “Awards” or “Stock Awards”)
to officers, directors, employees and consultants enabling them to acquire up to
F-37
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements on Form F-3 (No. 333-275991, 333-270859, and 333-273293) of our report dated January 29, 2024 (March 18, 2024, as to the November 28, 2023 reverse share split described in Note 1c and the change in presentation currency discussed in Note 1d), relating to the financial statements of Clearmind Medicine Inc., appearing in this Annual Report on Form 20-F of Clearmind Medicine Inc. for the year ended October 31, 2023.
/s/ Brightman Almagor Zohar & Co.
Certified Public Accountants
A Firm in the Deloitte Global Network
Tel Aviv, Israel
March 18, 2024
Exhibit 15.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference therein of our audit report dated March 8, 2022 (except as to Note 1(c) which is as of October 19, 2022), included in its Annual Report on Form 20-F for the year ended October 31, 2023, filed with the Securities and Exchange Commission, in the Registration Statements on Form F-3 (Registration Nos. 333-275991, 333-270859 and 333- 273293) and related Prospectuses of Clearmind Medicine Inc.
/s/ SATURNA GROUP CHARTERED PROFESSIONAL ACCOUNTANTS LLP
SATURNA GROUP CHARTERED PROFESSIONAL ACCOUNTANTS LLP
Vancouver, Canada
March 18, 2024